Unit 6 - Growth & return Flashcards
Timeline - concept
It is a work calendar. Shows the activities to be performed with its start and end date and their priority or simultaneity
Timeline - what is it useful for?
✦Planning and control of activities: Times, milestones, simultaneity and priority…
✦Calculation of resource’s needs
Organization chart - Concept
It is the graphic representation of the hierarchy and responsibilities of an organization. It is the image of the formal structure
Organization chart - what is it useful for?
✦Define areas of responsibility and who will be in charge of each area.
✦Define coordination methods (contact between departments/workers)
✦Planning and control of each defined responsibility area, in combination with schedule, budgets….
Operational budget - concept
Forecast of all company income and expenses over a period of time
Operational budget - what is it useful for?
✦Calculation of resource needs for each of the areas (complements the organizational chart and the timeline)
✦Planning and control of activities (monitoring of strategic implementation, deviations and corrective actions)
Operational budget - components
1 Income 2 Variable costs 3 Fixed costs 4 Depreciation and amortization 5 Non-operating expenses
Operational budget - income estimate
✦Serviceable obtainable market (SOM)
✦Is a realistic estimate of the total sales figure we can obtain considering our resources
✦It is the estimated total sales figure.
✦Specifying volumes (units sold, contracts, number of customers, products in the range, etc.) and price (average price, unit price, price per customer segment, etc.)
Operational budget - SOM
calculation with traction metrics and growth hacking metrics
Operational budget - information sources:
- Budgets (prices, actual sales)
- Reference to competitors’ data
Operational budget (TAM SAM SOM)
✦TAM Total addressable market: Focus on Market size
✦SAM Serviceable available market: Focus on your technology
✦SOM Serviceable obtainable market: Focus on competition, countries, trends, my distribution channels
Human capital concept
“Abilities and qualities of people that make them productive”
Important tasks of HR management
✦ATTRACT & RETAIN: Includes recruiting, signing contracts, socialization, motivation
✦DEVELOPMENT: Includes training and development of career plans
✦REMUNERATION: Includes performance evaluation, and designing payment plan. Important the concept of equity (related to the concept of justice and fair treatment)
Critical aspects of human capital for start ups:
- ATTRACT & RETAIN workers: How to attract talent that is working at companies receiving a well structured (and probably high) salary?
✦Appeal to passion (chance to contributing to making a better world)
✦Attractive working environment
✦Economic incentives: substitute cash with future value: participation in value created
✦Work in employer branding - MOTIVATION: How to motivate workers without appealing to big salaries? (Independence, responsibility, Challenges, )
- TEAM BUILDING: How to create a fine tuned and cohesive team to cope with uncertainty inherent to starting up?
✦Clearly define and share company’s mission, vision and values: pillars of organizational culture
✦Empower workers
✦Flexibility: Adapt to worker’s needs - REMUNERATION: How to design attractive packages with limited resources?
✦Components: Base salary + variable pay (conditioned to performance i.e incentives, commissions, bonus…stock, stock options) + indirect pay (Not related to performance i.e health insurance, pension plans, life insurance, car… )
✦Flexibility (smartworking, working schedules..) working environment are key
Metrics or KPI by phases - development & validation
Objectives: To discover and to validate customers
Keys: Activation and retention (traction)
Metrics or KPI by phases - growth & return
Objectives: To generate demand
Keys: Acquisition, referral and return (Growth hacking)
What is growth hacking?
Marketing specialty focused on increasing the number of customers/users of the company as quickly and as cheaply as possible
Growth hacking - how does it work?
✦With the product developed and a certain customer base (confirmed buyer persona)
✦With creativity to define original and specific growth actions
✦With experiments, analyzing and being agile (metrics to see if the actions to be tested work and follow/abandon)
Growth hacking metrics
✦Customer acquisition cost (CAC)
✦Customer life time value (CLTV)
✦Return on customer acquisition
✦Referral rate
Customer acquisition cost (CAC)
- Investment required to acquire a new customer. It is the cost of turning interested into customers
- Interesting to calculate per channel
Total marketing expenses (per period) / New customers (per period)
Customer life time value (CLTV)
- Net profit per customer during its relation with the company/product.
Requires:
- Income (Average $ per operation or period)
- Customer’s life (operations or periods)
- Gross margin (operations or periods)
Income x Life x Gross margin
Return on customer acquisition
- Return on the investment to acquire customers (Basic metric for business growth or expansion)
- Interesting to calculate per channel
CLTV (Net profit per customer)
CAC (Investment required to attract)
Referral rate
- Ability of our customer base to attract new customers (word of mouth or virality)
Referred customers / Total new customers
Growth financing: Early stage
✦Growth and profitability phase, with a validated business model and “traction”
✦Financing is sought to “scale” with growth and expansion plans
✦Possible funding sources:
- Venture capital A Series
- Venture capital B Series
What is venture capital?
Companies and funds that invest on a temporary and minority basis (15-30%) in recently created companies with high growth potential”.
A Series : €2-5M in Europe
B Series : More than €6M in Europe (rare)
Growth financing: Later stage
✦Mature company, in growing phase, with the aim of being acquired by large companies or going public (IPO) ✦Possible funding sources: - Large venture capital firms - Private equity companies - Investment banking
What is Private equity?
“Venture capital companies and funds, which acquire larger holdings (even 100%), less restrictive in terms of investment sectors, and with active involvement in management”.
C Series: +€10M in Europe
D Series and following: road to the Unicorn
What is Investment banking?
“Companies specialized in the design and financing of complex corporate operations (mergers, acquisitions, restructurings, IPOs and similar)”.
C Series: +€10M in Europe
D series and following: road to the Unicorn
